Emanuel mulls options as pension overhaul stalls in Springfield

Seeks relief for Chicago as reform stalls at state level

Mayor Rahm Emanuel has been waiting for a year and a half for the state legislature to repair its government worker pension system in the hope he could piggyback on any solution to fix his own dire situation at City Hall.

Such help appears elusive, however, as lawmakers opted to skip Thursday's fall session amid predictions that a resolution to the pension issue was unlikely before the end of the year. Legislators left Springfield just days after Senate President John Cullerton's assertion that the state's $100 billion pension shortfall is not a "crisis."

Given the situation, the mayor on Wednesday said he is now "looking at every scenario" to get state lawmakers to act on relieving the city's more immediate pension problem that could require major tax increases and service cuts to cover hefty increases in retirement payments for firefighters and police officers in 2015.

While the mayor offered no specifics, that scenario could take the form of Chicago trying to go it alone in seeking pension relief at the Capitol or enlisting the help of other towns across Illinois also struggling to pay the added costs of public safety pensions.

"The pension crisis in Illinois is not solved until relief is brought to Chicago and all of the other local governments across our state that stand on the brink of a fiscal cliff because of our pension liabilities," Emanuel said during his budget speech to aldermen Wednesday.

"I believe I can speak for the members of this council when I say that we will not preside over a city in which garbage is not picked up, graffiti is not removed, and libraries and other vital services that our residents rely on must be shut down," he added.

Any solution, however, would need state lawmakers to sign off, and it's unclear whether they'd be willing to help Chicago before resolving their own pension mess.

The lingering pension problem was a focus for Emanuel as he unveiled a nearly $7 billion city spending plan for 2014. He plans to fill a $339 million hole in next year's budget though cost-cutting, a host of tax, fee and fine increases, and more speed camera revenue.

Those types of moves won't be enough a year from now, when a 2010 state law kicks in and puts Chicago on the hook to boost payments to police and fire pensions by almost $600 million — a figure representing about one-fifth of the city's day-to-day operating budget. Barring changes from Springfield, the 2015 city budget hole could hit nearly $1 billion.

Legislative leaders met behind closed doors, and state Sen. Matt Murphy, a member of a special legislative pension panel, said progress toward a pension agreement "is still occurring." But the Republican from Palatine said a deal was "not likely" to occur when lawmakers are scheduled to reconvene in Springfield in the first week of November because of the need to ensure that actuaries review any changes.

"I still think the second week of (the fall session) is a little optimistic. I really think this is going to be something that is more likely during spring session, but that's not really up to me," said Holmes, D-Aurora.

The lack of agreement among lawmakers after more than two years of attention devoted to the state's pension problems has done little to assuage Emanuel, who believes it would be economically devastating to the city to be forced to impose a massive property tax hike, make deep cuts in city services or a combination of both to pay for police and fire pensions.

"Do I look patient to you?" the mayor asked rhetorically during a meeting of the Tribune editorial board after his budget address. "Just know we've looked at every scenario, and we're thinking about and preparing for every which scenario."

Added Emanuel: "I expect Springfield to move. If they don't move, we'll be right back here dealing with the budget."

One City Hall source close to the mayor said, "There are many paths to getting to our goal. Right now (our effort in) Springfield is pursuing a state (pensions) funds first approach. Should that change we will be ready to move."

One of Emanuel's chief allies in the state legislature is Cullerton, the Senate president.

"At the city level, you can definitely use the word 'crisis.' The city has a huge pension problem, which is almost being overshadowed" by the state problem, Cullerton said Sunday on WGN-AM 720.

Cullerton proposed legislation at the end of the legislature's spring session in May that would require a series of small city property tax increases starting in 2018 — delaying an increase in the politically unpopular tax until what would be Emanuel's second term as mayor. It also would delay the need for big increases in fire and police pension payments to 2022.